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Starting a New Business, Making Accounting Mistakes?

When you decided to open for business, you had a vision for the future. You identified a need and came up with a solution you could provide and sell. Also, you invested your time, your money, your knowledge, and your drive to make it into a reality. You’re probably like a lot of small business owners. You did not anticipate having to handle your business’s accounting needs. Many highly intelligent, responsible business operators get caught making common small-business accounting mistakes. These errors can trip them up and cost them a lot of money in the long run. Are you afraid this might happen to you? Or if it already has — what is the best way to avoid these costly errors? Learn the top four small-business accounting mistakes and how to prevent them. Continue reading →

These accounting tips are beneficial if you are the owner of a small business. After all, you are endlessly busy. Between keeping track of the day-to-day requirements and monitoring growth and profit, it is easy to get overwhelmed. That means you might neglect important recordkeeping that will help you in the long term. Here are five helpful accounting tips and hints that will make accounting easier. Make sure that you do not miss any milestones or deadlines.

1. Business and personal expenses should be kept separate.

It is easy to make the mistake of using your business credit card for personal expenses and vice versa. Those errors can always be amended through reimbursements and revised record-keeping. However, you will save yourself a lot of time, trouble and aggravation if you keep the two types of expenses completely separate from the start.

2. Do not underestimate the difficulty of your taxes. Hire a tax professional.

Since you are smart enough to run your own business, it is natural to assume that you can save yourself the expense of hiring a tax professional to file your taxes. The truth is that there is a lot more to accounting then filling in forms. A tax professional will be familiar with deductions you do not realize you are entitled to take. Your tax professional will also inform you of an underpayment that might lead to trouble down the road.

3. Be realistic about upcoming expenses.

When things are moving along smoothly, it is natural to assume that the status quo will remain. You need to be realistic. Anticipate that office equipment will wear down or needs to be upgraded. Staffing needs will change, and overhead costs are unlikely to remain the same. By planning for future major expenses and setting aside funding for those possibilities, you will save yourselves many headaches in the future.

4. Do not forget your employees when calculating expenses

A lot of business owners will sit down to forecast their expenses or try to figure out where their money is going. However, they forget to give proper weight to the amount that they are spending on staffing expenses such as insurance, health care and payroll taxes. Your employees are generally one of your biggest assets. It is important that when you are calculating costs, you make sure that you have not forgotten about all of the expenses involved with keeping them, as well as with expanding your business.

5. Do not lose sight of your Accounts Receivables

If you were an employee of a business that failed to give you a paycheck, you would be more than just upset. You would take action to make sure that you get paid. Yet many owners of small businesses get so enmeshed in the minutia and big decisions of their day-to-day operations that they lose track of whether clients are paying promptly and what percentage of invoices remain open. Falling behind on your record keeping, such as accounts receivables, is not a good idea. It causes things get so far behind that it becomes costly and difficult to collect. You may end up not getting paid or fostering negative feelings. Track payments as they come in. Note how far behind payments due are. And, take note of which clients are presenting you with collection problems.

Do You Need More Accounting Tips?

These accounting tips are straightforward and simple. Following them can make a significant difference in your ability to keep your business on track. These accounting tips will keep your forecasts accurate. They will allow you to take action when it is needed removing the emotion and keeping your collections factual. For more tips, read about the Top 4 Accounting Mistakes Small Businesses Make.

For more information on other steps you can take, contact Alex to make an appointment for a consultation. Also, we would love to hear your comments below or go to our Facebook or Google+ page and let us know your thoughts.

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Disclaimer: This publication/blog, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Joseph J. Cahill / Worthtax or any of its subsidiaries or its attorneys, employees or associates representing Joseph J. Cahill / Worthtax. Additionally, the foregoing discussion does not constitute tax advice. Any discussion of tax matters contained in this publication/blog is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing or recommending to another party any transaction or matter.